I believe that diversification is important to achieve satisfactory returns in the short-term and the long-term.
Diversification doesn't just mean spreading your money among Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and Telstra Corporation Ltd (ASX: TLS).
I think it's important that investors spread their money across different industries and different businesses that have good growth prospects.
Here are three I think fit the bill:
Magellan Global Trust (ASX: MGG)
This is a listed investment trust run by Magellan Financial Group Ltd (ASX: MFG), a fund manager which focuses on overseas-listed shares.
Since inception in October 2017 the fund's underlying portfolio has returned 7.2% after fees and expenses compared to the MSCI World Net Total Return Index return of 5.5%. It aims to pay a 4% yield on its net assets each year.
I think it's a good choice for investors because it owns some of the best global businesses in its portfolio like Alphabet (Google), Apple, Facebook, Kraft Heinz, Visa, Starbucks and Oracle.
Xero Limited (ASX: XRO)
Xero is a leading cloud accounting software provider. It started as a online bookkeeping provider and now it has developed a full range of products with advanced financial preparation, payroll, tax return preparation and accounting practice tools.
It is the dominant provider in New Zealand, it is winning the cloud accounting war in Australia and it's growing at a strong rate in the UK. It's so popular because it offers powerful automated and time-saving tools. It has very high gross margins and Xero has reached a big enough size where new subscriptions will soon fall to the net profit line.
Betashares Global Cybersecurity ETF (ASX: HACK)
As the Facebook data privacy scandal has shown, it is getting more important for big businesses and governments to keep on top of security. Ashley Madison, Sony and many others have been hacked in recent years.
The exchange-traded fund gives investors exposure to some of the largest companies in the world which offer cybersecurity services.
Some of its top holdings include Akamai Technologies, Palo Alto Networks, Symantec Corp, Cisco Systems and VMware. Over the past year the fund has returned 14.70% after fees, which certainly beats the ASX Index returns.
Foolish takeaway
I'd be happy to make a long-term investment in any of these shares at the current prices but if I had to pick one I'd choose the Magellan Trust because it has top quality holdings, it's diverse and should grow well over the long-term.
